NTPC sets floor price of Rs 201/share for follow-on offer

Public sector power producer NTPC Limited today said it had set a floor price of Rs 201 per equity share for its follow-on public offer, which will open tomorrow and close on February 5.

The floor price was decided at a meeting of the Empowered Group of Ministers (EGoM) held here yesterday, India's largest power generation company informed the Bombay Stock Exchange (BSE) in a filing today.

It said the EGoM had also decided to offer a discount of Rs 10 per share to eligible employees submitting bids in the Employee Reservation Portion. The minimum bid lot has been decided as 28 equity shares and in multiples of 28 equity shares thereafter, the company added.

The Cabinet Committee on Economic Affairs (CCEA) had, on October 19 last year, approved a proposal to disinvest five per cent of the paid-up equity capital of NTPC out of the Government's 89.5 per cent shareholding in the domestic market through book building process.

The rest of the equity in the company is held by the general public and the shares of the company are listed on the stock exchanges.

After the disinvestment, the Government's shareholding in the public sector company would come down to 84.5 per cent, an official press release said.

The Government had earlier disinvested 10.5 per cent of NTPC's equity through a public offer.

The company is offering 412,273,220 shares through the FPO and is looking at raising around Rs 8287 crores. The floor price has been fixed at a 4.9 per cent discount to the closing price on Monday, possibly with the aim of attracting retail investors who did not show much interest in some of the offers that had hit the markets in recent months.

On December 1, 2009, Finance Minister Pranab Mukherjee had told the Rajya Sabha that the policy on disinvestment articulated in the President's Address to the joint sitting of both Houses of Parliament on June 4 last year and in the General Budget for 2009-10 required the development of "public ownership" of CPSUs to share in their wealth and prosperity, with the Government retaining majority shareholding and control.

"This objective is relevant to profit-earning CPSUs as it is only these that will sustain investor-interest for sharing in their prosperity," he said.

He said that, in line with this policy announcement, the Government had decided that already listed profitable CPSUs not meeting the mandatory public shareholding of 10 per cent would be made compliant.

Secondly, all CPSUs having positive net worth, no accumulated losses and having a net profit in the three preceding consecutive years would get listed on the stock exchanges, he said.

He said the proceeds form disinvestment would be channelised into the National Investment Fund and during April 2009 to March 2012 would be available in full for meeting the capital expenditure requirements of selected Social Sector Programmes decided by the Planning Commission/Department of Expenditure. The status quo ante will be restored from April 2012, he added.

NNN